Investment Rating - The report maintains a skewed downside view for Brent crude oil prices, projecting a range of $50 to $70, with a specific focus on a $60 target over the next 0-3 months [1][4]. Core Insights - Geopolitical factors are critical in determining the next movements in oil prices, with significant developments in US-Iran and Russia-Ukraine relations influencing market sentiment [1][2]. - Recent reports suggest that Israel may be planning an attack on Iran's nuclear facilities, which could lead to a bullish scenario for oil prices if US-Iran negotiations fail [3][4]. - The report highlights the ongoing erosion of Chinese purchases of Iranian oil due to increased US sanctions, leading to a buildup of floating storage off the coast of China [4]. Summary by Sections Geopolitical Risks - The report emphasizes the binary nature of geopolitical risks, with potential outcomes swinging oil prices between $50 and $70 [1]. - The US has extended a waiver for Chevron to operate in Venezuela, which adds complexity to the geopolitical landscape [1]. Market Dynamics - Brent crude oil has been trading in a range of $60 to $66 in May, influenced by tariffs and geopolitical events [2]. - A recent OPEC+ decision to unwind supply has contributed to market volatility, with oil prices reacting to US-China trade optimism and US-Iran negotiations [2][4]. Inventory and Demand - US commercial crude inventories rose by 1.3 million barrels week-over-week to 443.2 million barrels, which was more bearish than expected [9]. - Gasoline inventories increased by 0.8 million barrels to 225.5 million barrels, indicating a bearish trend against surveyed expectations [11]. - Diesel inventories also rose by 0.6 million barrels to 104.1 million barrels, further reflecting bearish market conditions [10]. Future Outlook - The report anticipates another OPEC+ meeting in June to assess supply levels, with expectations that they may hold current levels flat through the second half of 2025 [7]. - The upcoming summer driving season in the US may influence gasoline demand, with current prices lower than the previous year, potentially affecting consumer sentiment [11].

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of HK$695, implying an expected share price return of 33.5% and a total return of 34.4% [4][8]. Core Insights - Tencent is positioned as a strong player in AI applications, leveraging its comprehensive Weixin ecosystem to enhance user targeting, content generation, and game stickiness through AI optimization [1][2]. - The company has made significant advancements in its Hunyuan large model, achieving top rankings in various benchmarks and expanding its multi-modal capabilities [3][6]. - Tencent Cloud is experiencing a notable increase in API calls, particularly in automatic speech recognition and text-to-speech, indicating a rapid adoption of AI technologies [1][3]. Summary by Sections AI Development and Infrastructure - Tencent aims to build an AI-native ecosystem to enhance its service capabilities for enterprise customers, focusing on large model innovation and infrastructure upgrades [2][3]. - The Hunyuan Turbo-S model ranks 8 in the Chatbot Arena benchmark and is among the top 10 for coding and math capabilities, showcasing Tencent's competitive edge in AI [3]. Agent Development - The Smart Agent Development Platform has been upgraded to enhance multi-agent collaboration and improve efficiency in corporate use cases [4][6]. - This platform is designed to support external customers in setting up their own AI agents, reflecting Tencent's commitment to expanding its AI offerings [6]. Knowledge Base and Product Matrix - Tencent has introduced several products to meet enterprise demands, including the Lexiang knowledge base for knowledge coordination and the marketing cloud agent for automated customer targeting [7]. - The integration of Tencent Hunyuan and DeepSeek large models aims to enhance individual employee productivity through AI Q&A and content generation [7]. Valuation - The target price of HK$695 is derived from a sum-of-the-parts (SOTP) valuation approach, applying various price-to-earnings (P/E) multiples across different business segments [8]. - The valuation breakdown includes online games, online advertising, social networks, fintech, and cloud/business services, indicating a diversified revenue stream [8].

Investment Rating - The report initiates coverage on CATL H-shares with a Buy rating and sets a target price of HK$425. The A-share target price is raised to Rmb391 from Rmb362 [1][5]. Core Viewpoints - CATL is transforming into a leader in new energy technology and solutions, well-positioned to benefit from long-term growth in the global electric vehicle (EV) and energy storage system (ESS) battery markets [1][5]. - Despite a slowdown in global battery demand growth, the effective utilization ratio in the battery industry is expected to improve due to slower capacity expansion, with CATL's capacity utilization projected to exceed the industry average [2][10]. - The impact of US tariffs and geopolitical risks on CATL is expected to be limited due to its low exposure to the US market [3][18]. - Margins in the ESS battery segment are anticipated to rebound in the latter half of 2025 as sales to overseas markets increase [4][20]. Summary by Sections Addressing Investor Concerns - **Global Battery Demand Growth**: Expected to slow to 25% in 2025 and 26% in 2026, down from 40% in 2023 and 30% in 2024. The global battery effective utilization ratio is projected to rise to 58%/59% in 2025/26 from 57% in 2024 [2][10]. - **Impact of US Tariffs**: CATL's battery shipments to the US fell to 2-3% of total shipments in 1Q25, indicating limited exposure and impact from tariffs [3][18]. - **Unit GP and EBIT Pressure**: CATL's margins are expected to recover in 2-4Q25E with an increase in overseas sales, which typically have higher margins [4][20]. Company Description - CATL is the largest battery producer globally, specializing in rechargeable lithium-ion batteries for EVs and ESS, with a sales volume of 381GWh for EVs and 93GWh for ESS in 2024, reflecting a year-on-year growth of 19% and 35% respectively [41]. Investment Strategy - The report emphasizes CATL's strategic positioning in the new energy sector and its potential to capitalize on the growing demand for EVs and ESS, reinforcing its status as a top pick in the battery supply chain [5][29]. Valuation - The target price for CATL A-shares is set at Rmb391, based on a 16.6x EV/EBITDA for 2025, while the H-share target price of HK$425 implies a 28.2x P/E for 2025 and 22.4x for 2026 [5][29].

Investment Rating - The report indicates a resilient overall export volume from China, with expectations for continued growth in exports through May [1][3]. Core Insights - Shipping to the US experienced a slight decline of 25.3% YoY in container departures for the 15 days ending May 21, down from a previous decline of 8.5% YoY [2][12]. - Despite the dip in US shipping, overall cargo throughput at Chinese ports grew by 3.3% YoY in the week ending May 18, slightly down from 4.2% YoY in the previous week [3][13]. - Non-US exports have been strong enough to offset the weakness in shipments to the US, indicating a broader resilience in China's export market [1][3]. Summary by Sections Export Performance - Container export volume from China turned positive at 4.2% YoY in the week ending May 16, compared to a previous decline of 2.0% YoY [9]. - Bills for seaborne imports from China contracted further, reflecting earlier weaknesses in departure data [2][14]. Shipping Trends - Freight fees for US routes have seen a slight increase, indicating potential upward pressure on shipping costs despite the decline in volume [2]. - The overall shipping environment remains resilient, with non-US markets compensating for the decline in US-bound shipments [3][1].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies within it Core Insights - The evolving rates narrative is a key risk for equities, with current pressures on U.S. Treasuries driven by fiscal concerns related to ongoing budget negotiations [1][9] - Rising yields are expected to suppress equity valuations, but the impact is diminishing, indicating that current equity valuations are extended but not exuberant [5][30] - Equity risk premia (ERP) have increased year-to-date, providing potential room for contraction to offset the effects of higher yields on equity valuations [6][26] Summary by Sections Bond Market Dynamics - The long-end of the U.S. Treasury curve has seen a rise of 43 basis points in the 30-year yield month-to-date due to fiscal concerns [2][11] - A weak 20-year Treasury auction signals bearish sentiment and potential buyer strike risks [2][11] Rates Risks - While global equities can initially absorb higher rates, a continued bond sell-off may lead to increased stock market volatility [3][10] Performance Analysis - In the current Fed cutting cycle, Treasury yields have risen atypically while equities have performed as expected, though higher rates are likely restraining equity performance [4][19] - U.S. equities have increased approximately 5% since the first Fed cut, while European equities have risen about 7%, both below historical averages [19] Valuation Insights - Valuations are seen as the primary transmission mechanism from yields to equities, with current U.S. and European valuations appearing high but not excessive [5][24][30] - European sectors sensitive to rising rates include leveraged Utilities, Real Estate, and Telecoms, while sectors likely to outperform include Energy, Basic Resources, and Banks [25] Equity Risk Premiums - The equity risk premium has risen amidst macro uncertainties, providing a buffer against rising bond yields [6][26] - Current estimates of developed market ERPs are around 3%, compared to lows of 1.5% in 2023, suggesting a potential buffer against rising nominal yields [26][31] Future Outlook - The ability of equities to withstand higher rates depends on the accompanying economic conditions; solid global growth and contained inflation can mitigate risks, while slowing growth and stubborn inflation may pose challenges [7][34]

V i e w p o i n t | 22 May 2025 14:33:01 ET │ 16 pages Xiaomi (1810.HK) Xiaomi officially debuted its in-house 3nm SoC Xring O1 and watch chipset T1, with its first electric SUV YU7 products unveiled. Three major spotlights include O1 performance, T1 with self-developed 4G LTE modem and the whole YU7 series equipping Nvidia Drive AGX Thor (700 TOPS) and LiDAR, while the Xiaomi 15S Pro spec, unrevealed YU7 price and robust 1Q25 home appliance sales are somewhat within expectation. Despite that the market is ...

Citi Research North America US Credit Strategy US Corporate Mutual Fund Flows Daniel Sorid AC Head of US IG Credit Strategy daniel.sorid@citi.com +1 212-723-1992 Mathew Jacob AC +1 212-816- US IG Credit Strategy mathew.jacob@citi.com 1547 See AppendixA-1 for AnalystCertification, Important Disclosures and ResearchAnalystAffiliations Citi Research is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covered in its research reports. As a result, inves ...

Investment Rating - The report indicates a modest sales beat expectation of approximately $500 million for NVIDIA's April quarter, with flat expectations for the July quarter at around $44 billion, compared to the Street's $46 billion [1] Core Insights - The CEO of NVIDIA, Jensen Huang, asserts that AI will become essential for every company, highlighting ChatGPT as a rapidly growing product that has transformed information retrieval [2] - Huang notes that AI diffusion was initially misunderstood, and recent changes in U.S. government attitudes towards AI restrictions have influenced NVIDIA's operations, particularly in the Middle East [3] - AI investments are projected to positively impact countries' GDP in the long term, especially in nations with excess energy that can export AI factories [4] - China is recognized as a significant but singular market for AI, with expectations that its AI market will reach $50 billion in a few years [5] - NVIDIA has been developing Physical AI for a decade, viewing it as a high-volume shipping opportunity, with the self-driving business currently valued at $5 billion [6] - NVLink Fusion technology is in demand from NVIDIA's customers, with the company advancing to NVLink Gen 5, which offers substantial improvements in bandwidth and latency [7][8] - NVIDIA emphasizes that its success will not compromise its partners and is actively diversifying its supply chain [9] - The company anticipates maintaining over 80% market share in the ASIC sector due to its rapid advancements [9]

Investment Rating - The investment rating for NVIDIA Corp is "Buy" with a target price of $150, indicating an expected total return of 10.8% from the current price of $135.40 [4]. Core Insights - NVIDIA's CEO emphasized the company's commitment to accelerating the adoption of Generative AI through GPU-powered data centers, highlighting key announcements such as NVLink Fusion, developments in Physical AI, and the launch of enterprise-focused RTX PRO 6000 Blackwell servers [3][9]. - The introduction of NVLink Fusion aims to integrate NVIDIA's AI infrastructure with emerging ASIC AI ecosystems, positioning the company favorably in a rapidly growing market [3]. - The new Isaac GR00T model is designed for humanoid reasoning and skills, supporting NVIDIA's broader strategy in Physical AI [8]. - NVIDIA's RTX PRO 6000 Blackwell servers are targeted at enterprises, leveraging advanced AI capabilities for various demanding workloads [9]. Summary by Sections NVLink Fusion - NVIDIA unveiled NVLink Fusion, a chiplet silicon that enables industries to build semi-custom AI infrastructure, marking a strategic entry into the ASIC AI infrastructure ecosystem [3]. Physical AI Developments - The Isaac GR00T model will generate synthetic motion data for humanoid robot development, reinforcing NVIDIA's focus on Physical AI [8]. Enterprise Solutions - The RTX PRO 6000 Blackwell servers are designed to replace the existing $1 trillion CPU server installed base with GPU servers, enhancing enterprise AI workloads [9]. Market Expectations - NVIDIA is expected to ship approximately 1 million GB300 or around 15,000 GB300 NVL servers by 2025, aligning with market checks in Asia [3].

Investment Rating - The report does not explicitly provide an investment rating for the industry or companies discussed Core Insights - The University of Michigan Sentiment index fell to 50.8 from 52.2, indicating a weaker consumer sentiment than expected [1][3][4] - Inflation expectations have risen, with 1-year expectations increasing to 7.3% from 6.5% and 5-10 year expectations rising to 4.6% from 4.4% [3][5] - The decline in consumer sentiment may not yet fully reflect recent tariff pullbacks, suggesting potential for improvement in future releases [4][5] Summary by Sections Consumer Sentiment - The University of Michigan Sentiment index has decreased for five consecutive months, indicating persistent weakness in consumer sentiment [4] - The current conditions and expectations indices both fell, contributing to the overall decline in sentiment [3] Inflation Expectations - 1-year inflation expectations are at their highest level since 1981, reflecting significant concerns about rising prices [5] - There is a notable divergence in inflation expectations based on political party affiliation, which may influence consumer behavior [5] - Recent tariff pullbacks are likely not fully accounted for in inflation expectations, indicating potential volatility in future readings [5] Economic Outlook - The report suggests that while consumer sentiment is weak, it remains uncertain whether this will lead to a reduction in consumer spending in the coming months [4]